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Birmingham News Series on Tax Reform

Bob Blalock, The Birmingham News

When editorial writers for the BirminghamNews began their eight-day series about Alabama's tax system on August 26, 1990, they had no idea that it would lead to a Pulitzer Prize the following year. Alabama's largest daily newspaper, founded in 1888 by Rufus Rhodes, had published some outstanding journalism during its 100 years of existence but had never won journalism's most prestigious award. During the summer of 1990, however, editor Ron Casey and editorial writers Harold Jackson and Joey Kennedy were focused on exposing the Alabama legislature for its inaction on tax reform, with little thought to winning prizes.

Harold Jackson, Ron Casey, and Joey KennedySince its adoption in 1901, Alabama's Constitution has protected and preserved a tax system that benefited several interest groups, particularly the owners of large tracts of land and timber, and unfairly burdened the poor. Much of Alabama's tax code has been embedded in the Constitution, such as property-tax rates and limits on corporate and individual income taxes. For example, property taxes, because of the "lid bill" and "current use" amendments in the 1970s, remain the nation's lowest by far. Alabama's property taxes would have to be doubled to reach the next lowest state's average and tripled to reach the national average.

For generations, the state's political leaders ignored calls for tax reform from various quarters, such as the Russell Sage Foundation in 1918, the Brookings Institution in the 1930s, and the legislature's Interim Committee on Revenue in 1947. By April 1990, a growing chorus of business leaders, academics, elected officials, and the editorial page of the Birmingham News was calling for more fairness in the state's tax system, prompting lawmakers to establish a blue-ribbon panel of business, education, and labor leaders, former elected and appointed state officials, and tax and legal experts to study Alabama's taxes. Although the report was scheduled to be issued in late August, the legislature, pressured by allies of agribusinesses, timber companies, and other large land-holding interests that benefited the most from the state's tax system, delayed the first report until after the November elections that year. The commission did not release its report until January 1991.

When it became obvious the commission's report would be delayed, the editors decided to publish a series of reports entitled "What They Won't Tell You About Your Taxes." Produced over eight consecutive days, the reports detailed how and why the state's tax system was among the most unfair in the nation. Alabama enjoyed the lowest per capita tax rate in the country, and as a result state services were chronically underfunded and ineffective. For example, there were too few parole officers and social workers, public assistance was paid only to those families of three that made less than $1,400 a year, the state paid foster families less to take care of abused children than a typical kennel charged to board a dog, and per-pupil public school funding ranked near the bottom of the nation.

The practice of "earmarking" tax collections—restricting tax money to a specific program or agency—intensified the problems of a tax system that raised too little money for state services. Alabama earmarked almost 90 cents of every tax dollar, compared with a national average of 28 cents of every dollar. That meant money could not be shifted when crises arose. Because so many state services historically have been underfunded, interest groups have sought to lock in their meager funding sources. The state's income tax, for example, is set aside for teacher salaries and cannot be used to meet other needs. Although Alabamians have been loath to trust their elected officials to spend money wisely where it is most needed, earmarking virtually ensures that they cannot.

Although Alabama's per capita tax burden was the nation's lowest, high sales taxes and the low threshold for paying state income tax meant that the tax rate for poor families was among the highest in the nation. Various reports through the years have shown that Alabama's poorest citizens pay a much higher percentage of their incomes in taxes than do the state's wealthiest citizens. At the same time, rich and powerful individuals, businesses, and landowners benefited from exemptions the legislature had carved out for them in the 1901 Constitution and through successive amendments, particularly two changes in the 1970s that dramatically lowered property tax rates.

Ron CaseyAfter months of examining history books, studies, and tax documents and interviewing dozens of experts, the editorial writers at the Birmingham News suggested ways to improve Alabama's tax system, such as increasing the income-tax threshold for poor families, ending special-interest loopholes on sales taxes on new cars and on services such as dry-cleaning and haircuts (which diverted hundreds of millions of dollars from tax collections), raising property taxes to increase revenue, and eliminating the sales tax on food that was a burden to low-income families. Despite the paper's criticism and calls for reform, there was little reaction from the legislature beyond some congratulatory telephone calls and letters to the paper thanking the writers for exposing the tax system's problems.

In January 1991, the blue-ribbon tax commission filed its report. Many of its recommendations mirrored those from the BirminghamNews's editorial page series, such as increasing property taxes, raising the state income tax threshold, and ending many of the sales-tax loopholes. Three months later, the Pulitzer Board chose the paper's series as the winner in editorial writing over entries from the Boston Globe and Forward, a New York City weekly. The Pulitzer Prize, established by publisher Joseph Pulitzer in his 1904 will as an incentive to journalistic excellence, is universally viewed as the industry's most prestigious award. Coming just days before the start of the legislative session, the timing for the BirminghamNews's award was ideal. The newspaper even re-ran the series when the session began to encourage lawmakers to take up the tax reform cause.

Rather than take up the series's challenge to fix the tax system's ills, lawmakers passed a resolution congratulating the editorial page staff for winning the Pulitzer Prize with a series that "dealt with the painful reality of Alabama's tax laws." The irony, of course, was that previous legislatures had created and continued that very tax system, and the lawmakers who held office in 1991 were sustaining it.

Although the legislature debated the tax panel's recommendations in its 1991 session, it did not pass any tax reform proposal. Likewise, lawmakers in the 1992 session failed to enact reform, despite the work of another tax panel convened by then-Governor Guy Hunt.

Two years of failure in the legislature stalled the tax reform effort. But over the next decade and a half, the Birmingham News continued to write about the inequity of Alabama's tax system. For just as long, the legislature continued to ignore calls for change by other newspapers and tax-fairness advocates such as Alabama Arise, a coalition of groups lobbying for the poor.

In 2006, 15 years after Casey, Jackson, and Kennedy won journalism's highest honor (and six years after Casey died), the legislature passed its first significant, albeit small, tax relief measure. Lawmakers, pushed by Governor Bob Riley, increased the state's lowest threshold at which families pay income tax from $4,600 a year to $12,600 for a family of four. Riley, who in his first campaign for governor called Alabama's tax system "immoral," originally proposed raising the threshold to $15,000 a year (about $5,000 below the poverty level). Although the $12,600 threshold for collecting state income tax moved Alabama out of last place, as of 2007 the state still ranked fourth from the bottom of the 41 states that collect income tax. Many tax reformers credited theBirmingham News's series 16 years earlier, and the editorial page's continuing campaign for tax reform, with laying the groundwork for and moving lawmakers toward finally taking that first step to tax fairness.